RE: Why the drop ?27 Jun 2023 02:39
Reason for the drop outlined in the following article.
https://www.share-talk.com/how-the-uk-offshore-wind-industry-ran-out-of-puff/
Bluefield (BSIF) and Next Energy(NESF) who are part of our sector have also gone down, but not SSE, which could just be held up by investors eyeing their 3.7% dividend in a few weeks.
Article is from 25th June.
The key paragraphs for me in this article I've copy/pasted below.
If this to be all in the hands of Mr Jeremy €unt and our current inept government, then we'll all just have to cross our fingers IMO.
Chart-wise, each bounce and new low keeps being taken out, but strong support at 129.
Cheers and GL.
...
However, a rise in global supply chain costs – spurred by energy price hikes following the Ukraine war – has significantly impeded this progress. Inflation has compelled manufacturers of components, such as turbine blades and nacelles, to ask for higher prices, while increasing interest rates are making project financing more expensive.
...
Many of these challenges aren’t exclusive to the UK but are exacerbated by domestic issues, such as a sluggish planning system and declining British subsidies. These issues are made more evident when compared to the generous financial assistance provided to companies in the US under Joe Biden’s Inflation Reduction Act.
The sector’s challenges are predicted to come to the forefront during the Government’s fifth allocation round (AR5) for the “contracts for difference” (CfD) scheme in the summer.
CfDs are 15-year subsidy agreements between the government and power generation companies, intended to ensure steady revenue streams for energy projects.
In these auctions, companies suggest a “strike price” for their electricity, and the most competitive bids result in subsidy agreements with the Government. When the market price for power falls below the strike price, the company’s revenues are supplemented, and when it exceeds, they remit payments to the Government. Consumer bills fund these CfDs.
However, during this summer’s allocation round, offshore wind faces competition from solar and onshore wind, which are less expensive to construct. Additionally, the maximum strike price for offshore wind has been set at £44 per megawatt hour, a figure that developers argue is impracticably low.
Alistair Phillips-Davies, the CEO of SSE, a company participating in the development of Dogger Bank, warned in May that after years of declining CfD costs, it’s crucial for politicians to reassess pricing, particularly in light of inflation affecting the supply chain.
...
According to Muscat from RenewableUK, there’s still room for adjustments to the AR5 strike price, which she contends should be twice its current rate for offshore wind.
“Developers need the assurance that prices can increase if necessary to reflect economic circumstances,” she adds.
“If the Government’s indicators are that prices can only decrease, then I beli
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